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Niko Resources Ltd proposes to relinquish its on-land block in Cauvery Basin, as attempts to find hydrocarbons have yielded no results.
Sources said that Niko, which has 100 per cent stake in the block awarded under the fifth oil and gas licensing rounds, has invested close to $50 million in the block. The company has finished the first phase of exploratory work in the block CY-ONN-2003/1, and now plans to relinquish it.
The company has performed the seismic work and drilled four of the five wells required under the first exploration phase, Niko said, after its results for the quarter ended December 31, 2011. The estimated cost of the remaining work commitment is up to $2 million.
“Wells drilled to date have been unsuccessful. The company intends to relinquish the block,” the company said.
On differences with the Directorate-General of Hydrocarbons over minimum work programme commitments in the Cauvery block, the official said, “we are under discussions.'
Niko is engaged in the exploration and production of natural gas and oil in India, Bangladesh, Indonesia, the Kurdistan region of Iraq, Trinidad, Pakistan and Madagascar. In India, Niko also has interests in Reliance Industries Ltd-operated Krishna Godavari Basin D6 block, besides, three other blocks.
Quarterly loss
The Canadian company posted a quarterly loss (ended December 2011) on lower production from the D6 block. Niko also said that output from the block will continue to decline. D6 block output contributed 79 per cent of Niko's total production last year.
The output from the block could fall below the current 38-39 mmscmd. Reliance last year tied up with BP to develop the D6 block. Niko has 10 per cent participating interest in the block. The D6 block comprised 77 per cent of Niko's oil and gas revenue during the quarter ended December 2011.
Agencies add: Niko's October-December loss was $40.4 million compared with a profit of $25.8 million, or 50 cents a share, a year ago.
Revenue fell about a quarter to $74.79 million.
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